Wall Street Donors Pulling Funding From Democrats; What Difference Will It Make?

In the past few days, both The Washington Post and Politico have run stories on the dramatic drop in contributions from Wall Street donors to Democrats. From the Post’s story:

A revolt among big donors on Wall Street is hurting fundraising for the Democrats’ two congressional campaign committees, with contributions from the world’s financial capital down 65 percent from two years ago. The drop in support comes from many of the same bankers, hedge fund executives and financial services chief executives who are most upset about the financial regulatory reform bill …. This fundraising free fall from the New York area has left Democrats with diminished resources to defend their House and Senate majorities in November’s midterm elections…. The two congressional committees have raised $49.5 million this election cycle from people giving $1,000 or more at a time, compared with $81.3 million at this point in the last election.

And from Politico’s story, by Maggie Haberman:

While the exact quarterly figures won’t be known until after the July 15 filing deadline, a number of Democratic campaign insiders said the past few months were a mighty struggle to raise cash for candidates. … While most Democrats blame the economy and anger from Wall Street for the fundraising predicament, President Barack Obama, whose own donor model was low-dollar contributors and Internet contributors over high-dollar types, has headlined just one major New York event so far this year, for the Democratic Congressional Campaign Committee.

Both describe how wealthy Wall Street types have stopped writing big checks to Democrats — and both run through several reasons why. Many Wall Street donors have lost a lot of money since 2008, between the collapse of various hedge funds and investment banks and Ponzi schemes. Many Wall Street donors are angry at the Obama administration for going after the banks. Furthermore, I imagine that, with the Wall Street reform process mostly over, fewer big donors see the need to try to influence the goings-on in Washington anymore. And perhaps this campaign cycle is just less exciting than the last. Enthusiasm tends to go down during midterms, and without Obama out there fundraising alongside many Senate candidates, many of those deep-pocket types might feel less need to give.

The question, of course, is how this might change the electoral landscape. Both stories, I think, could use a bit more illustration of just how influential the financial industry is in Washington. I pulled these charts from the Center for Responsive Politics, showing donations by industry:

These data are from the last cycle, and donations from individuals in the securities and investment world came in third, just behind retirees and lawyers. But if you look at donations by broader industry group, rather than sector, the financial world comes in first, and by far — much higher than oil and gas, or Hollywood, or Silicon Valley, or construction, or agriculture:

One might think that the loss of deep-pocketed donors might have an outsize impact on states like Connecticut and New York, where many financial firms are based. But that is not strictly true. Indeed, both New York senators, Democrats Chuck Schumer and Kirsten Gillibrand, are up for election and doing well, even if Wall Street donations are short. And financial industry, if not Wall Street, types give huge sums to basically every senator. Consider Sen. Blanche Lincoln (D), running a tough campaign in Arkansas. Last time she ran, donors from the securities and investment industry gave more to her campaign committee than donors from any other industry, save for law.